Budget brass tacks | A bumpy ride for infrastructure

Budget brass tacks | A bumpy ride for infrastructure
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First Published: Wed, Jul 01 2009. 12 30 AM IST
Updated: Wed, Jul 01 2009. 09 41 AM IST
New Delhi: While many of the problems ailing the infrastructure sector today are ones that can be dealt with outside the budgetary process, the industry will be looking for a renewed focus from the government on how it plans to go about bridging India’s huge infrastructure deficit.
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The sector faces several issues. Financing, primarily equity financing is a short-term problem for some companies, with the economic downturn. The government has taken a number of measures to improve the availability of debt capital, especially by allowing the India Infrastructure Finance Company Ltd to raise Rs10,000 crore through bonds and an option on another Rs30,000 crore in the future. The money is to be used to refinance commercial bank’s infrastructure financing.
But with the current condition of the financial markets, the bigger problem the ministry of road transport and highways is grappling with is how they will lay tarmac on the ground if companies don’t bid.
The National Highway Authority of India is asking for more autonomy to be able to award projects on the Build-Operate-Transfer annuity model; where the government essentially pays annuities for projects, which don’t see interest from the private sector.
The construction industry also asks for clarifications on the Fringe Benefit Tax and asks that the government allow companies to borrow abroad without any end-use restrictions.
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First Published: Wed, Jul 01 2009. 12 30 AM IST